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Electronic Data Interchange (EDI) is simply a set of data definitions that permit business forms, that would have

been exchanged using paper in the past, to be exchanged electronically. This simple set of definitions has spurred a number of organizations to put in place an operational environment in which the exchange of electronic business forms substitutes for the exchange of paper forms. This has resulted, in some cases, in the establishment of an EDI environment, which arguably represents the most advanced state of electronic commerce today, causing some to view EDI and electronic commerce as one and the same. We view EDI only as a subset of electronic commerce, albeit a very important one. As such, EDI provides an excellent example of a working electronic commerce environment and is a good starting point for examining electronic commerce. Electronic data interchange aims at single point collection of data for use by various agencies participating in a common activity. Electronic Data Interchange) The electronic communication of business transactions, such as orders, confirmations and invoices, between organizations. Third parties provide EDI services that enable organizations with different equipment to connect. Although interactive access may be a part of it, EDI implies direct computer-to-computer transactions into vendors' databases and ordering systems.

The Internet gave EDI quite a boost. However, rather than using privately owned networks and the traditional EDI data formats (X12, EDIFACT and TRADACOMS), many business transactions are formatted in XML and transported over the Internet using the HTTP Web protocol. See X12, EDIFACT, TRADACOMS, extranet, externalization, XML and HTTP.

OBJECTIVE

The basic documents for transaction of business will be taken only once by one agency and other agencies will take the information from that agency, electronically, avoiding the need to either physically take the document from one office to another or keying in the data again and again involving the attendant problems of manual labor and errors creeping in at each stage of data entry.

EDI IN CUSTOMS CASE

Customs to Port Trusts/Airport authority. Customs to Customs. Customs to DGFT (Min of Commerce). Customs to Export promotion councils,like AEPC, HEPC, etc, Customs to RBI/Banks. Customs to Importers/Exporters Customs to Custom House Agents Customs to Shipping Lines/Airlines

FUTURE SCENARIO

It should be possible to create a few or even a single message/document for the entire process of transactions in the course of foreign trade. Steamer agents would file manifest with the Customs Electronically that would be used also by Port Trust. CHA's/Importers file B/E / S/B electronically with the Customs which could cover more data so that Port Trust, CFS's, Transport authorities, Sales Tax Dept. are able to use the same. The Certification of Licence would be available on-line once EDI connectivity is established with these agencies (like DGFT, ASI, AEPC etc), when electronic fund transfers (EDI for banks) are established, Importer / Exporter can make payments without drafts or coming to Nodal bank for the purpose and can receive his refund drawback payment directly to his account.

Once VSAT connectivity is established with all Customs / Excise formations in India, all modvat verifications, end use certificate, rewarehousing certificate for transfer bonds, TRA's could be made immediately. Above all there would be uniformity in assessment decision all over India.

EDI is a way of business life. It is based on the principle of trust and contractual obligations. Once Evidence act and other laws of the land recognise EDI transactions and provide for the same by fast settlement of disputes, it should be possible to do away with requirements for paper documentation, i.e., there would be no necessity to submit invoices, packing list, B/L etc in paper. Records need only

Tenders are called to propose a complete solution on a turnkey basis comprising hardware. Therefore it is essential that Govt. there would be not need for examination of cargo in a routine manner. The selected vendor would be required to customize the solution to suit the needs of ICES and maintain the system on a continuing basis for an initial period of three years. The proposed Customs gateway will enable data interchange partners to transmit messages (including lodging of documents) to the Customs computer system and also receive messages form it. the vendor would be required to work in close association with domain experts from the Customs department. CBEC has invited bids for "Supply. Installation and Commissioning Of Electronic Commerce/EDI Gateway and Network for Indian Customs". EDI cannot be introduced in a significant way unless we have complete overhaul of working system. trade and transporters recognise the likely benefits and move forward to establish a regime of mutual trust and confidence. Attitudinal change in the officers and the business people is required to adopt to EDI. if required. which would handle all transactions centrally and route it to the concerned Customs Commissionerate over ICENET. the facility of Green Channel would apply to almost 80% of cases of regular Importers with a clean tract record. which thrives in an environment based on trust of faith.. Unless sincere efforts are made to transform the working environment. in any format. whereas in the present manual system the procedures and practices are all based on lack of trust and faith. software and networking arrangements. methods and procedures. Electronic Data Inter-change (EDI) is a way of business life. Above all unless the Laws/Acts governing business in the country are amended to recognise EDI transactions. For this purpose. full-fledged EDI is not possible. with a distinct positive attitude we would be left behind in the interest of the nations economic prosperity we adopt ourselves to global scenario and move towards paperless transaction system. ELECTRONIC COMMERCE/EDI GATEWAY AND NETWORK With the issual of Tender Document dated 01st February 2000. EDI is a reality. Since EDI is based on trust. The . It is now proposed to extend EDI services to all trading partners by setting up the Customs gateway. The messages could be based on international messaging standards such as UN/EDIFACT or in the form of ASCII files.be kept at the offices of Importers / Exporters / CHA's for a minimum period. for verification by concerned authorities.

New Delhi. Port authorities.e. Import and Export General Manifests electronically. Indraprastha Estate. Shipping Bills. importers.. Messages are also exchanged with other Government agencies.400 Protocol) The trading partners of Indian Customs can use the services of any Value Added Network (VAN) Service Provider. email attachments of File Transfer Protocol (FTP) over the Internet. either from their respective office premises (for those who have established connectivity either through NICNET or any other Value Added Network service provider). Airports Authority of India. The VAN would route the messages to the Customs EC/EDI gateway router. Container Corporation of India. which would be located in the premises of the Directorate of Systems. Customs and Central Excise in Central Revenues Building. Members of the trade. Customs will make available a port on its . shipping lines etc. Connectivity between the VANs and the Customs EC/EDI gateway will be the sole responsibility of the VANs. In addition. are required to file their declarations i. The trading partner at any location can dial into the local node of the VAN to which he is a subscriber and transmit the message as an EDIFACT file or a flat file. THE PROPOSED SOLUTION Connectivity using VAN (X. The proposed solution will be versatile enough to receive. airlines. exporters.department proposes to enable the users to send/receive messages through web based forms.. the monthly/quarterly Central Excise returns of assesses would also be filed through the proposed gateway and routed to the concerned Central Excise Commissionerate. Trade Promotion organizations. and enable seamless conversion into ICES formats BACKGROUND The Indian Customs EDI System (ICES) now operational in 19 major Customs Stations envisages electronic filing and capturing of declarations regarding goods. transmit and process messages in any of these modes or a variant or combination thereof. or through the Service Centres established for this purpose. Bills of Entry. Container Freight Stations and other Customs Warehouse operators.

for a charge to be specified at a later date. messages from the local ICES servers would be routed through the EDI engine. consignment and assessment details etc. Both versions provide the functionality of preparing the import and export declarations to the Custom House Agents.1 and consist of approximately 10 Forms accessing 50 tables (including look-ups) each. These declarations include importer/exporter. The EDI engine would act as a translator to convert the file into the proprietary ICES flat file format. File Transfer Protocol (FTP) / as an attachment to email . The process of filing the import declaration (Bill of Entry) and the export declaration (Shipping Bill) will be the same as in practice at the EDI stations. The service centre module for imports and exports has been developed on Oracle 7. The successful bidder will be responsible for the development and deployment of applications for handling the message interchange excluding the backend ICES server operations that would be handled by the application vendor. The EDI alternative to the service centre data entry module for remote filing of Customs documents has been developed in Clipper and has been functioning for over four years at Delhi. converted into the corresponding EDIFACT document and routed to the trading partner through the VAN. The EDI engine to the concerned port would then rout the flat file format over ICENET for processing by local ICES server at the Customs nodes. Similarly. The backend processes will include loading of the flat file into the ICES database and generation of messages as flat files (that would then be handled by the proposed application). The same forms will be available on the web server as downloadable forms for the members of the trade using Internet as their medium of transacting business.gateway router to the VAN depending on the proposed connectivity. importers and exporters. The gateway would route the message through the firewall to the EDI engine. Connectivity using Internet: It is proposed to use the medium of Internet whereby the user would be allowed to interchange documents through any of the following: Hosting of Customs and Central Excise forms on the web server that could be downloaded for entry by the trading partner.

Message Exchange Server In the case where messages are to be interchanged between Customs and custodians of cargo (namely ports. secure and seamless interchange. It is expected that such clients would prefer to send the import and export declarations by using File Transfer Protocol (FTP) or as attachments to email (which would need to be detached from the mail). an HTTP server is proposed to be hosted in the public area for posting general Customs and Excise related information. Ludhiana. which would primarily be related to transactions. Airports Authority of India. Work on this web server is at an advanced stage of completion. and CONCOR) and between Customs and bank the interchange will take place by connecting the Local Area Network of the ICES and those of the banks/custodians through a message exchange server router. VSATs would be operational using ICENET and would be provided by Customs. The network would cater to all traffic between the gateway and the nodes. Raxaul & Haldia). The bidders are required to customize these servers/connectivity devices for uninterrupted. ICENET The Indian Customs and Excise Network (ICENET) are proposed to be set up between EC/EDI gateway and the Customs nodes. which would be in the nature of messaging and database queries. In addition. as well as inter node data. Petrapole. These declarations could be sent as UN/EDIFACT messages in which case the EDI engine would be customized to translate them into the proprietary flat file messages that could be loaded into ICES. ICENET has been designed as a redundant terrestrial network with VSAT backup where necessary (Jaipur.048 Mbps or higher bandwidth to be . The backbone of ICENET would be E1 lines of 2.There are several Custom House Agents/importers/exporters with a high level of automation who are able to generate the import/export declaration using data available with them.

Mumbai – Sahar Air Cargo. Nhava Sheva. c. b. Mumbai. Marmagoa Haldia Mangalore Port Jaipur Ludhiana Petrapole land Customs (Bangladesh border) . ICD Patparganj. h. d. g. j. q. n. Delhi – IGI Airport. Sabarmati and Air Cargo Tuticorin Port Surat Goa – New Customs House. The selected vendor would be responsible for setting up ICENET on a turnkey basis (including interfacing with all other agencies such as the Department of Telecommunications) and managing the network for a period of three years from the date of commissioning. e. f. p. k. Custom House (Strand Road) Bangalore Air Cargo Hyderabad Air Cargo Cochin Custom House Trivandrum Air Cargo Kandla Customs House Ahemedabad – ICD. o. The E1 lines would terminate at the cluster locations in the metropolitan cities of Delhi. Government of India. Chennai – Air Cargo (Meenambakkam) and Customs House (Rajaji Salai) Calcutta – Air Cargo. Mumbai Customs House (Ballard Estate) and CFS. l. Tughlakabad.leased from the Department of Telecommunications. Calcutta and Chennai from where leased lines of smaller bandwidth (64/128 Kbps) would be used to connect the Customs nodes to the cluster locations. ICD. i. r. Mumbai. CUSTOMS NODES PROPOSED TO BE LINKED WITH GATEWAYa. m.

Although the basic design is still under consideration.s. Vizag Customs House Raxaul land Customs (Nepal border) ELECTRONIC DATA INTERCHANGE – VERSION 2 ICES Version 2 is the biggest project involving the total redesign of the Indian Customs EDI System. Vendors may be chosen for development and could be expected to bring in IT related skills. t. DATA WAREHOUSE Current Status: Planning and Systems Specification Stage: It is proposed establish data warehouse to harvest data generated out of the automated systems. Project Advisory Groups and core working groups comprising of domain specialists’ from Customs and Central Excise have been set up by the Board. which would govern the Customs and Central Excise administration in the coming 5-7 years. Once this documentation is ready. high-level committees such as Project Steering Committees (headed by members of the CBEC)..) Data warehouse would also acquire data through a number of additional applications and systems providing organization-wide capabilities to use data effectively. the data warehouse would broadly . the respective automation projects of Customs and Central Excise would begin. These groups are in the process of finalizing the documentation of business processes. The work involves the entire lifecycle of the software design and development and would use the latest information technology. The Data warehouse would extract data from ICES and SERMON transactional systems to enable easy. The department’s own automated applications would themselves require data analysis (for the purposes such as risk analysis etc. flexible analyses by Customs and Central Excise officers. Presently.

The wholesale data warehouse would acquires data from ICES. These users would be able to analyse the data in the data marts using sophisticated web based tools. Data from the main data warehouse would then pushed periodically to smaller data marts on individual databases running on specified RDBMSs and operating systems.Data security and control are maintained through out the transmission process using passwords. there is no need for re-entering data.Making personnel more efficient and it improves business capabilities by speeding up throughput. Reduced Error and Increases Business Information Accuracy . thus. and the coordination necessary to ensure timely and appropriate delivery of data. The data marts are required to be custom designed for specific departmental users and applications. Sperry. Each re-entry of data is a potential source of error. the data marts. reducing the risk for human error.Operation Lowering Operating Cost . data management including data mining.EDI replaces paper transactions with electronic transmissions. Increase Productivity . Increase Security . saving time and reduced cost of business transaction and enabling the automatic processing of documents.With the implementation of EDI. 2. Advantages of EDI 1. Sermon and other future systems other sources of data and would store the data in a versatile repository. the mechanisms to transport data among the data transaction systems and the wholesale and retails warehouse (data marts). cleaning and data harvesting.Tactical . Skills are required in database design.consist wholesale data warehouse. user identification and encryption.

stock handling. stock in-and-out. departments and regional offices are co-ordinate together.. Improve Corporate Trading Relationship .With the use of EDI. Fact and accurate permits better managing on stock balance. . Accounting . Fast and accurate communications permits better management. With EDI. corporate buyers are now insisting their suppliers to conform to company performance criteria. Distribution ... Suppliers are given more specification.EDI facilitated financial processes and potential in providing faster reconciliation or elimination of tasks. Many large. This strengthen inter-company relationship. 3. customer have more accurate information on the progress of their orders. inventories are better managed. specification.Business units.etc. Better Quality Control . Companies with EDI will certainly have an edge. auditing.Improving delivery of services and goods by reducing order and delivery time and increase the reliability of meeting targets. checking and improving cash flow. making the entry of new competitors more difficult and gaining more new business opportunity.Strategic Faster Trading Cycle ..EDI can directly and indirectly helps organisations improve their inventory control. wastage being minimized. buyer and customer can easily search for product description. Marketing Competitiveness . prices and availability.EDI allows faster and streamlining trading cycle between organisations leading to improved relationships between trading partners.Inventory Control . The use of computers to obtains information is replacing the use of telephone and catalogues.Quality control has becoming a key thrust for progressive organisations.

since the audience is probably already familiar with SMTP. to get an EDI system running. This paper examines the concepts from the perspectives of each discipline. 2. data processing.Highly dependence on the participation of trading partners. What is EDI? . and data communications. It is extremely difficult to get a high level of supplier compliance. Costly for smaller companies . EDI is a complicated mixture of three disciplines: business. there are no ways to force trading partners to accept these standards.Many small companies are facing resources problems in getting starter with the initial implementation of EDI system.The Risks and Disadvantages involving in the use Of EDI Trading Partners Involvement . EDI will be a meaningless if your trading partner didn't get involve using EDI system effectively. It is beyond the resources these companies to invest tens or hundreds of thousands of dollars in setting and implementation costs.Even though there are widely-accepted and widely-used standards. MIME. as well as weeks of personnel training. Cooperation between trading Chek this one out too 1. and other Internet messaging protocols. Introduction Traditional electronic data interchange (EDI) has been evolving for approximately 25 years and has truly become the paperless environment that is so often talked about. Internet standards are excluded from the discussion of communications protocols. Difficult to agreed on standard used .

Fax is primarily paper based and requires a human interface. but recognizes the need for interpersonal (human to human) communications. Besides the three career disciplines that are internal to the organization.2 Comparing EDI and fax Similarities exist between EDI and fax in that both use telephones lines and both can travel from computer to computer (Sawabini. and safe method of sending purchase orders. 2. the transfer of moneys. 2. inexpensive. invoices. Data communication is then necessary for the exchange to take place. There are distinct differences however. three other issues are important for EDI trading to take place: standardization of formats. This term has evolved from placing EDI under the EC (EC) umbrella. By incorporating a wide range of technologies. However. not EC. EC being the broad view of electronic trading. quotations. and other frequently used business documents. requests for quotations. 1995). it clearly requires a business process. Often today one will see the term EC/electronic data interchange (EC/EDI). security. data processing is clearly necessary for application processing. The key idea involved is the exchange of documents that allow a business application to take place without human intervention. Because the key idea involved is the exchange of documents that allow a business application to take place without human intervention. . the focus of this document in on EDI. The ability to send business documents between machines simplifies and expedites the business process itself. and value-added networks (VANs). EDI is defined as the interprocess (computer application to computer application) communication of business information in a standardized electronic form. EC is much broader than EDI.Since EDI is commonly defined as the direct computer-to-computer exchange of standard business forms.1 Looking closer at EDI EDI is commonly defined as the direct computer-to-computer exchange of standard business forms. payments. EC includes EDI. It is the marrying of these three disciplines that allows the "paperless trading" that comprises EDI technologies. Many businesses choose EDI as a fast. and the sharing of common databases as additional activities that aid in the efficient conduct of business.

In the EDI environment. The translation software in figure 1 is the software that maps the elements of a user-defined file into the ANSI X12 or EDIFACT standard format. 3. and e-mail is not acceptable to applications. Figure 1: Data Processing and EDI The user-defined files in figure 1 are the flat files that are produced by a business application. as depicted in figure 1. 2.Fax receipts are not generally acceptable to applications. fax also apply to EDI vs. Data processing allows the EDI operation to take information that is resident in a user application and transform that data into a format that is recognizable to all other user applications that have an interest in using the data. This software is available through commercial retailers on various platforms from PCs to mainframes. whereas EDI requires standard message formats between trading partners. data processing will handle both outgoing and incoming data. . Fax machines accept nonstandard data formats. However. These files may or may not be formatted by the user. These are the business files that need to be translated into the X12 format. Both travel from computer to computer and both use an electronic mailbox. e-mail: e-mail message format is not standard. Data processing and EDI One of the technological fields required to implement EDI is data processing. three of the four differences listed for EDI vs. and anything that can be scanned can be faxed. e-mail requires human interface.3 Comparing EDI and e-mail Similarities also exist between e-mail and EDI.

a new mapping scheme needs to be identified and associated with that trading partner (Sokol. If a new trading partner places no new requirements on the translator. when the trading partner requires that additional or different data fields be sent. The standard in the industry. Modems are heavily used by EDI practitioners today." This method allows for high-speed continuous transmission in which the sending and receiving modems are controlled by clock pulses. Following are some basic concepts that describe mechanisms and methods used in this transport of data: Direct connect is the term used to indicate that two EDI trading partners trade information directly to each other without a third-party connection service. is transmission by binary synchronous modem or "bisync. as this paper is written. although not the primary transport mechanism for EDI transactions today. the EDI participant still needs to have the ability to communicate with remote trading partners to take advantage of EDI. The clock pulses regulate the rate and timing of the data flow. Once the standards have been employed and the required software is in place.The mapping of the user-defined data elements into the translation software requires some skill in mapping. Modem-to-modem connections provide a level of security and reliability that long-time practitioners are reluctant to give up. have the potential to become the de facto standard of transmission for high-volume . 1995). However. Routers. Data communications and EDI The other technological field that is heavily involved in EDI implementation is data communications. 4. 4.1 Transport mechanisms move the data Data must be transported across telecommunications lines in order for the trading partners to trade information. the new trading partner is simply set up under existing mapping rules. Direct connects are normally used by large corporations for intracompany EDI transactions and for intercompany transactions with trading partners that have established highvolume rates of exchange of EDI data. The mapping itself requires knowledge of both the translation software and the EDI standards being used so new mapping and processing rules can be set up for the translator.

The message itself is composed of body parts. The architecture of the X.435 is the specification for the EDI body part that attaches to the X. which is tasked with developing standards to enable incompatible networks and computer systems to exchange data. X. Currently.400 is an electronic messaging standard that was developed by the Consultative Committee on International Telegraph and Telephone.400 message.435 is a standard that further enhances the X.400 header precedes the message itself. MIME. X. an X.400 messages. X.2 Communications protocols standardize the data formats EDI transactions can be passed between trading partners using standard transmission protocols. routers are used mainly over leased lines. Some of these common standards are SMTP. The idea is the production of a global electronic directory and a guide to associated databases so the user can find an e-mail address if it is needed and not known. Within the outer envelope lies the content header. requiring expensive setups and ongoing data communications transport costs. again application independent. The header allows the sender of the message to specify information relating to the transmission and delivery and notice requests.435 standard. and diagrams must be transmitted using protocols that allow the transfer of binary data. X. Graphic images. each body part being an applicationspecific message. X. 4.500 facilitates the delivery of X.traffic. The business process and EDI . which is used to deliver the message to the recipient. X. and X. Internet Protocols are excluded from this discussion as the audience is already very familiar with them. discards the outer envelope. 5.500 is an addressing directory containing the names and characteristics of electronic messaging receivers. A message transfer agent (MTA) receives the message. including those that include the X.500. X.400 standard calls for an outer envelope that is application independent and is used to route the message. In this standard. and then reads the header to determine the recipient.435.400 standard to make it deal more effectively with EDI transmission requirements.400. charts.

within industry itself. banking industry. The buyer will select a preliminary group of suppliers and then employ the methods of competitive bidding.2 A typical small purchasing application The business application depicted in figure 2 is a simple purchasing application." 5. the President has issued an initiative to streamline government procurement through the use of EC.Any business application that can be improved through paperless trading in a fast. the buyer issues an RFQ to the . The current push in the EDI world comes from companies who wish to trade with each other electronically--buyers and their suppliers--hence the term "trading partners. As soon as a need is established and precisely described. First. negotiation. and then Figure 2: Business Application and EDI As shown in figure 2. efficient environment is a good candidate for EDI. EDI is currently widely used by the airline industry. credit card industry. Routine items may be purchased using suppliers that have already been contracted with. New items or high-value items may require investigation by the buyer in selecting an appropriate supplier. This business process was chosen for two reasons. new EDI technology is developing fastest in this area. Second. or a combination of the two to secure the final supplier. Since the initiative was announced in October 1993.1 Applications of EDI The business process examined here to which to apply EDI concepts is the procurement process. These factors make the procurement process the most relevant business process to examine at this time 5. the thrust within the government has been to implement the initiative using EDI technologies. When competitive bidding is used. and auto industry. the procurement process normally begins with the buyer being made aware of a need within the organization to make a purchase. the buyer begins the process of selecting the supplier that will be used.

assignment and contracting or the order. Normal business methods suggest that the supplier may not bother to acknowledge the offer if the items are immediately shipped to the buyer. contract acceptance. Additionally any conditions or sampling plans will be stated precisely. and invoicing and payment procedures. latex-based paint. The purchase order itself becomes a legally binding contract. Any drawings. Typically. When the items are not . For this reason the buyer will carefully prepare the purchase order and ensure that the wording is precise and specific.suppliers that the buyer might be willing to do business with. shipment rejections. The original copy of the purchase order constitutes a legal offer to buy.xx. Once a supplier has been selected. compliance with regulations. delivery performance and contract termination. Change orders are required when a company makes a change in the contract after a purchase order has been issued. patent rights and infringements. the change order either supplements or replaces the original purchase order. all purchase orders as boilerplate to those orders. diagrams. The quotation will contain pricing information so the buyer can do a price comparison between the suppliers. when accepted by the supplier. the purchasing department issues a serially numbered purchase order. These boilerplate terms and conditions cover a wide range of concerns including. The supplier who is issuing a quotation may quote a price of $xxx. warranties. For instance. Normally a list of terms and conditions designed to give legal protection to the buyer on various matters prescribed by law are incorporated in. or attached to. or related documentation that is necessary to precisely describe the item being purchased will be incorporated or referenced in the purchase order. the supplier issues a quotation to the buyer. The buyer will issue the change order and. The purchase contract then comes into existence when the contract is performed or when formal acknowledgment of acceptance of the offer is made. the RFQ will contain the same basic information that will be included on the purchase order. When a supplier receives an RFQ that the supplier has an interest in bidding on. an RFQ might be issued for 200 gallons of white.

The data communications aspect of EDI is the domain of the data communications discipline. If the business process would be improved by being accomplished more quickly and with increased efficiency. 6.immediately shipped. using data communications technologies. The marriage of these disciplines allows for the "paperless trading" that comprises EDI technologies. Once the trading partners receive the data. The resultant paper document is then mailed to the purchaser. or may acknowledge and incorporate the supplier's own terms and conditions in the acknowledgment. If the seller's terms are different than the buyer's. For this reason it is imperative that the buyer beware of the terms and conditions in the order acceptance. data processing technologies have to be applied to the business process so that the process can be handled using computers. The supplier may acknowledge the buyer's order accepting the buyer's terms and conditions. once the business process has been identified. 6. The automation of the business process is the domain of the data processing discipline. Third. terms and conditions that are in conflict between buyer and seller are excluded from the contract. the standardized business form must be transmitted from and received by computers. they keystroke the information received into a local application and then perform more data entry by entering a response into a local application.1 Paper document flow The traditional document flow for purchasing transactions starts with data entry by the purchaser to create a paper document to send by mail to trading partners. The business process is the domain of the business functional area. then the business process is a candidate for EDI. there has to be a business process. Marriage of the three disciplines EDI involves three very different and distinct disciplines. As EDI technologies evolve. then the supplier should send the acknowledgment back to the buyer. the law allows them to be incorporated into the contract as long as they do not alter the buyer's intent or unless the buyer files a written objection to the inclusion of new terms and conditions. Second. In general. Some type of standard must come into play in the automation process so that paper documents that are the output of the business process can be put into a format that is interchangeable between computers. the terminology changes. leaving the settlement to negotiation or suit. First. .

2 ANSI ASC X12 The American National Standards Institute's Accredited Standards Committee X12 (ANSI ASC X12) is the accepted standard for EDI transactions in the United States. . 7. Standards are the solutions to this problem. Standards Although communications and document standards are both critical.The procedure is both time consuming and labor intensive because data from both trading partners has to be entered twice. 1991). If businesses are to be able to communicate their data to one another. All business that conform to specific standards can share data in the formats delineated by those standards. document standards are the heart of EDI (Kimberly.2 EDI flow EDI data is key in only one time. The problem is that most businesses.1 The role of standards Standards are a necessary part of EDI. 7. At the receiving end. 7. and the only data entry required is for new data that may be needed to respond to the data received. 6. once at the point of creation and once at the point of entry to the foreign system. they must have a common ground to meet on to allow the exchange of the information. Time for transmission is also very fast in comparison to postal mail. The data is then translated into a standard format electronically and sent to the trading partner electronically. the time is considerably shorter than through the postal service. do not use the same application programs or hardware and software platforms. though using the same types of data. In addition. the data fields are mapped into local applications. Even on a slow modem connection. Every business has application files that are used to manipulate their data in ways that are familiar to the business. the originator must await a paper response sent by mail. at the original point of entry.

3 EDIFACT The International Standards Organization (ISO). 8. 7.4 Other document standards Other document standards are in existence. This requirement makes the standard more complex than an industryspecific standard.S. a business has multiple functionality and only has to use one standard for each business function. 7. but the advantages easily overcome the disadvantage of complexity. One of the requirements placed on the committee was and is to keep the standard open to interindustry applications. an organization within the United Nations. Security One of the major roles that is provided by the data communications technology is the ability to apply security to EDI transactions so that the transactions will not be tampered with or observed. which is used by the hospital systems and is ANSI approved. With a single standard. most notably HL7. The Electronic Document Interchange for Administration. The security modules that are discussed in this section are depicted in figure 3.The ANSI ASC X12 committee has the mandate to develop variable-length data formats for standard business transactions. but tried and true X12 standards are not abandoned in favor of EDIFACT. depending on the level of security needed. Figure 3: Data Communications Security . Everyone agrees that EDIFACT is the international standard. has been moving at a snail's pace. The standard appears to currently be taking the same route that metric standards have taken. and Transportation (EDIFACT) is the UN standard that the whole world has agreed to eventually adopt. and the X12 standard has been evolving ever since. The actual implementation of EDIFACT within the U. The committee was accredited in 1980. Commerce. has developed the EDI standard that is used in Europe.

8. a message recipient generates a matched set of keys. This schema requires that the private key cannot be generated from the public key. . databases will be built to store public keys and enhance the technology significantly.1 Confidentiality Confidentiality requires that all communications between parties are restricted to the parties involved in the transaction. which is held in private by the recipient is the only key that can decipher messages encrypted with the matched public key. one public key and one private key. There are several disadvantages to private-key encryption. Public key technology is the direction encryption technology is currently headed.500. The recipient broadcasts the public key to all senders or to a public location where the key can be easily retrieved. and other prying eyes from viewing data that is transmitted over telecommunications channels. Encryption prevents snoopers. Any sender who needs to send the receiver an encrypted message uses the recipient's public key to encrypt the message. This confidentiality is an essential component in user privacy. in general. The private key. Private-key encryption requires that both sending and receiving parties have the same private-encryption keys. as well as in protection of proprietary information and as a deterrent to theft of information services. In order to remain secure. the keys must be changed periodically and the users must be in synch as to the actual keys being used. Encryption is the scrambling of data so that it indecipherable to anyone except the intended recipient. Confidentiality is concerned with the unauthorized viewing of confidential or proprietary data that one or both of the trading partners does not want known by others. There are two basic encryption schemes. hackers. The receiver then decrypts the message using his identical key. is cumbersome and expensive. Encryption. Public-key encryption is gaining wide spread acceptance as the preferred encryption technology. Confidentiality is provided by encryption. With public-key encryption. The sender encrypts the data using his key. With the advent of X. private-key and public-key encryption.

authentication schemes do not hide data from prying eyes. A normal means of providing authentication is through the use of passwords. If that contracting officer decides to place an order for $30. The digital certificate has multiple functions. Similarly. 8. Data integrity is a guarantee that what was sent by the sender is actually what is received by the receiver.8.2 Authentication Both parties should feel comfortable that they are communicating with the party with whom they think they are doing business. say $25.3 Data Integrity Data sent as part of a transaction should not be modifiable in transit. The normal mechanism for acquiring data integrity is for the sender to run an algorithm against the data that is being transmitted and to transmit the result of the algorithm separately from the transmission. the seller may not have the authority to fill the order because the signature of the contracting officer's . Signatures are needed in some business applications for authorization purposes. If the results are identical. Providing data integrity is generally cumbersome and not used unless one of the trading partners requires it. The current technology ensures this through the use of digital signatures.000. 8. including browser authentication.000. then data has not been modified. Electronic signatures are the computerized version of the signature function. The latest technology to provide authentication is through the use of digital certificates that function much like ID cards. This is necessary if there is a need to ensure that the data has not been changed either inadvertently or maliciously. it should not be possible to modify data in storage. Upon receipt of the transmission.4 Nonrepudiation Neither party should be able to deny having participated in a transaction after the fact. the receiver runs the identical algorithm and then compares the results. However. a contracting officer may have a specified spending limit. For example.

setting up to use EDI involves considerable expense. EDI software is not inexpensive. . Value-added services offer the traditional VAN services and add to that the translation services required to create an X12 file. The typical buyer-VAN-seller connection is depicted in figure 4. and transport mechanisms. Thus the signatory cannot repudiate the signature at a later date.000. The authorization limits normally will have been agreed upon through a trading partner agreement. Value-added networks As seen in the previous discussions. By using these services a business does not have to worry about the myriad of communications complexities from having trading partners using different hardware. Figure 4: Value-Added Network Connection Likewise.supervisor is needed on all orders over $25. 9. 1996). The digital signature itself is used to detect unauthorized modification to data and to authenticate the identity of the signature.1 Connectivity VANs establish communications paths between their customers and with other VANs. software. These services allow the typical business to enter the EDI arena at minimal cost and maximum efficiency. A digital signature algorithm can be used to generate digital signatures. For small businesses and businesses that do low volumes between each other the cost is not always worth the efficiencies achieved. The digital signature is also useful to the recipient as a nonrepudiation device whereby the recipient can prove to a third party that the signature was in fact generated by the signatory. A business with an X12 translator still needs personnel on board that understand X12 and can use the software effectively. 9. Commercial Valueadded networks (VANs) make the burdens of the communications complexities easy by offering their communications services to prospective EDI users (Bort and Bielfeldt.

Some VANs offer cryptography services. a VAN provides security at several levels for its mailbox customers. The electronic mailbox is used for both store-and-retrieve and store-and-forward operations. This service enables the sender and receiver to communicate. This service also checks for message types and formats.4 Audit and control . but at different times of the day. 9. The receiver then retrieves its messages based upon the needs and schedules of the receiver. This service requires that the encryption be done at the customer site to be of any real value.9. instead of simultaneously. Store-and-forward service allows the VAN to forward messages to the receiver when the business need is not for immediate or event-driven notification. Access control is normally provided by a login and password sequence. Store-and-retrieve service allows the VAN to store the message in the receiver's mail box. In both cases. and ensures they are acceptable to the customer. 9. The VAN then acts on the message depending on whether the service is store-and-retrieve or store-and-forward. the sender of the EDI message transmits the electronic message to the VAN on its own time schedule. The cryptography is used to authenticate and encrypt messages to ensure confidentiality. Event-driven mailbox services can be handled by forwarding of the message to the receiver or by immediate notification from the VAN to the receiver that a message has been stored that meets the prearranged criteria for event-driven notification.2 Delivery Mailbox software is the most important feature offered by VANs.3 Security Generally. Messages are screened for the individual customer to ensure that they were sent by authorized trading partners of the customer.

the customer will supply the formats for the data and the VAN will map the data itself. If specific transactions need to be tracked. Normally if these services are used. the VAN can provide an audit trail of the requested data. and VANs can provide automatic sending of acknowledgments. The VAN can also track the transaction traffic. Transmission status reports to clarify status of an individual transaction are also available (Canis.5 Value-added services In the typical EDI implementation. The standard VAN interconnection is through bisynchronous modem connections. 9. not all trading partners will use the same VANs. both sender and receiver employ the services of a VAN because it eliminates the need to support different communications configurations between themselves and their trading partners. VANs have the capability to respond to presence of data and can fax or e-mail a notification to the customer if data is in the customer's mailbox. Many trading partners require acknowledgment for transactions received. 10. Effects and level of automation The benefits associated with EDI often cause overblown expectations. This is not an issue because VANs interconnect regularly with each other. Most VANs offer translation services so that customers do not have the need to purchase or maintain translation software. is just another way to format and transfer data. Using VANs also reduces the cost of communications equipment and staff to support the multiple configurations. Still. . The real use of EDI and the amount of value to be gained from its implementation depend upon whether or not EDI is integrated into the overall data processing effort of the organization. 1995). EDI.One of the features a VAN can offer a customer is a usage accounting data option whereby the VAN reports how much traffic comes to the customer in a given time period. in and of itself.

The effects of EDI depend greatly on the level of automation within an organization. Conclusions and future of EDI EDI is well established as effective technology got reducing costs and increasing efficiency. EDI applications that are fed by back-end processes and the databases that support these processes and then. real-time EDI over the Internet will replace normal time-delayed. EDI and the Internet will eventually become ubiquitous. and reduced order-cycle times--is attainable. In the past. feed the EDI data received back into the databases and back-end processes have a huge impact on the total level of automation within the organization. Once that standard is in place. EDI technologies are approximately the same age as Internet technologies. . but this is rapidly changing. the effect is much more limited than if EDI is integrated into the back-end processes of the organization. As EDI working groups within the Internet Engineering Task Force create interoperability standards for the use of EDI over the Internet and as security issues are addressed. But if the automation level of the organization is not high and is not integrated. The EDI working group already has a charter for an interoperability standard for process-to-process EDI. 11. EDI users are already seeing dramatic cost savings by moving their traffic from the traditional VAN services to the Internet. EDI over the Internet will be part of normal business. higher productivity. batch-style interactions. As the two technological communities begin to merge and as the business community sees the advantages of this merger. in turn. the technologies have been mutually exclusive. the effects of EDI will be lessened considerably. The well-known list of EDI-related benefits--lower costs. If the organization is only using EDI to send data in a format required by a trading partner.